 1. Don't have the board of directors act as a management committee.
One of the biggest problems faced by many governing boards is the temptation to act as a management committee. Management committees examine alternatives, undertake studies, review reports, and propose programs for board approval. Committees prepare and shape policy issues for presentation to the board. They do the fact finding, but boards decide. In sum, committees are a tool of management — not the board. When a board acts as a management committee, the result is reduced accountability, even in smaller organizations. It is hard for the board to hold management accountable when the board performs management tasks itself.
Even for policy matters properly coming before the board, it is not the role of the directors to propose plans of action, research the merits of each proposal, or decide how to proceed. Management should do this before the meeting and then propose a single plan of action for the board to accept or reject. Management should also make available its research and findings, but the board should not actually do this work itself.
2. Have all board resolutions prepared in advance of the meeting.
One of the best ways to avoid the committee problem is to prepare all proposed board resolutions in advance of the meeting. It is better to draft proposed resolutions in a relaxed atmosphere when all relevant factors can be carefully weighed. It is extremely difficult to try to come up with all the right words under pressure in front of the board.
With such precious little meeting time, it is better for management to take two hours drafting proposed resolutions in advance than to take 15 minutes of discussion time away from the board. Of course, resolutions occasionally need to be drafted during a meeting, such as when an item not on the agenda is brought up for discussion. However, this should be the exception rather than the rule. It is also best not to defer all resolution drafting until after the meeting. When this is done, it raises questions about what the board really said.
3. Send each director an information packet two weeks before the meeting.
Management should send an agenda and all supporting paperwork (including pre-drafted proposed resolutions) to the directors two weeks before the meeting. This enables the directors to see what management intends to cover during the meeting and to think about each issue in advance. Each director knows exactly what action management is proposing the board take.
When the meeting begins, each director should already have an idea of where the discussion of each agenda item should go. If the treasurer gives a report, directors should not have to waste time looking at financial statements or searching for key information. The statements should have been included in the information packet sent earlier. During the meeting, the directors can focus their attention on taking action, which is what meetings are for — rather than engaging in mere fact-finding.
4. Don't meet less frequently than three times each year.
It is extremely rare for a board of directors to meet too often. Usually, boards do not meet often enough. Sometimes, directors may not realize what it is they need to do, so there is not much point in meeting frequently (so they think). Alternatively, management may not be aware of things they need to bring to the board's attention. There is nothing worse than a board that meets only once annually to say hello, approve the reports of the president and treasurer, and then say goodbye. Such a board can hardly hold management accountable for anything.
There is no such thing as honorary board positions. Every director is a working member of the organization and needs to get involved in a review of operations on a regular basis. If management is not bringing organizational matters to the board's attention regularly, the directors need to go looking for them. Standard practice requires a board to meet three times each year, or once each year with two executive committee meetings of the board in between. The plain truth is that boards that meet only once each year are not taking their role seriously enough.
5. Telephonic board meetings should be the exception, not the rule.
To do its job well, any board needs to be thorough. Directors need time to read over documents, assess them, and discuss matters among themselves. They also need access to management personnel to answer questions and produce additional documents or reports if requested. A telephonic meeting, though convenient, works against thoroughness. Not only is discussion difficult to lead and interaction is limited, it is very difficult to hold a telephonic meeting for several hours, as board meetings often require. As a result, telephonic meetings tend to make directors less effective in discharging their oversight responsibilities and in holding management accountable for its actions.
Of course, telephonic meetings are sometimes useful and proper. In an emergency or when the board needs to act quickly, a telephonic meeting is a big help. Yet, a board should do this only when it needs to act before it can hold the next regular meeting. There is no reason to conduct a regular meeting as though it were an emergency. This defeats the ability of the board to investigate carefully and deliberate about matters brought before it.
6. Don't hold meetings in different vacation spots.
Planning a board meeting within a vacation setting is like shaking oil and water together — they do not blend well for long. Sooner or later they separate, and the vacation always comes out on top. The purpose of a board meeting is serious business, not pleasure, and the atmosphere of the meeting should enhance getting work done. Board meetings do not have to be boring, but why go out of the way to short circuit thoroughness? A board focused on pleasure cannot also focus itself on accountability.
There is nothing wrong with meeting in a resort area if that is where the organization has its headquarters. Nor is it wrong if it is the best mid-point for all directors to come to. Yet, to go looking for different resort areas in which to hold meetings or using the meeting as an excuse to take his or her spouse on vacation misses the point of holding meetings in the first place. The job of a director is too important to interfere with it in this way. Take the directors on a vacation between meetings, not during them.
7. It is better to preserve dissenting votes than unanimity.
Among many nonprofit organizations, there is a myth that the organization is best served by unanimity in all matters. This concept is often based upon the principle that strength comes from unity. However, unanimity is only important in matters that are themselves essential to the organization. Since matters coming before the directors normally require only a majority vote for approval, it is the spirit of liberty (to disagree) that should prevail. The charter or bylaws will specify matters that require unanimity.
One of the keys to holding management accountable is free and open discussion among directors. However, this is likely to produce dissenting votes from time to time. Conversely, the lack of any dissent betrays the probable lack of free and open discussion. From a liability perspective, the more essential an issue is to the organization, the more crucial dissent becomes to each director. If the board is held liable for its decisions, only directors who preserve their dissents for the record can relieve themselves from liability. Concern for both liability and accountability demands that directors have freedom to dissent from time to time.
8. Discourage voting abstentions, except when a conflict of interest exists.
Directors may sometimes wish to abstain from voting on a resolution rather than to vote against it. Often a response to the pressure of exhibiting unanimity, abstention is sometimes perceived as an inoffensive way to note an objection while leaving the unanimity intact. Though such conduct may please management, it does not serve the best interests of the organization. When regularly practiced, abstention produces a "rubber stamp approval" type of board that cannot hope to hold management accountable for its actions.
Abstention is only appropriate when asked to vote on a matter in which the director has a personal conflict of interest. A conflict of interest exists when a director's loyalties are divided, especially when corporate action may result in personal gain. Further, from a liability perspective, abstentions by directors present at a meeting will count the same as a vote of approval. A director must actually record a dissenting vote to avoid responsibility in a matter the board has approved.
9. Don't take lengthy minutes of reports or discussions during a meeting.
Taking minutes of a board meeting is somewhat of an art. Management needs to know what matters to bring to the board's attention and what kind of action is appropriate. Occasionally, people go overboard in making a full report of board discussions when drafting the minutes. However, board discussions do not need to be shown in the minutes at all. Only the final resolution is important.
Minutes should handle management reports a bit differently. The purpose of a management report is to inform the board of material facts that directors need in order to take proper action. Thus, some brief record of the report may be useful to state what facts were before the board when it made its decision. This protects both management and the board should liability for the decision become an issue. It is enough to summarize the key points of a report or include a separate document by reference.
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